House budget committee warned of impending fiscal challenges

The Missouri House Budget Committee was given a wake-up call in its first hearing.  First-year chairman Scott Fitzpatrick (R-Shell Knob) explained to its members the challenges they will face in crafting the budget for the fiscal year that begins July 1.

Fitzpatrick has said that budget could need to be trimmed by $500-million.    Former Governor Jay Nixon (D) already restricted $201-million from the current budget, and Governor Eric Greitens (R) is expected to make further restrictions in it.  Fitzpatrick said the items for which funding in the current budget is blocked likely won’t be appropriated in the Fiscal Year 2018 plan.

Fitzpatrick said some are describing the current budget situation as the worst since 1981.

In explaining how the state got here, Fitzpatrick said it began with a June marked by a drop in state revenue collections coupled with increased tax refunds to Missourians.

“We literally went from tracking at 3.2% growth for fiscal year 2016 on June 15 to being at .9% at June 30,” said Fitzpatrick.  “I mean that’s a $200-million swing comparing one year to the next, in two weeks.”

Fitzpatrick said that is combined with continuing growth in Medicaid and costs in the Department of Corrections, including a growing likelihood that Missouri will need a new prison.  He said those and other factors lead him to believe Missouri’s problem is with growing expenses more than it is with a lack of revenue.

“Since I’ve been here we’ve had, my first year we grew ten percent.  The second year … we contracted one percent.  The third year we grew almost nine percent and then this last year we grew one percent.  If you average that across the four years that’s not horrible revenue growth,” said Fitzpatrick.  “But the mandatories – the things that are in statute that people are eligible for like Medicaid have grown faster and that’s the challenge.”

The message, then, to members of the legislature – especially those on the budget committee – has been that there will be very little if any new spending in the Fiscal Year ’18 budget.

Another challenge is that the legislature will be starting the budget process differently than it has in recent years, in large part because Governor Greitens will not deliver his proposed spending plan as part of his State of the State Address next week.  Unlike recent history, when governors have delivered their budget proposals with that address, Greitens’ plan will be released closer to February 1.

Fitzpatrick believes the fact that Greitens is building his administration from scratch combined with the gravity and complexity of the budget situation is behind the delay.

House and Senate budget makers base their proposed spending plans on that of the governor.  Fitzpatrick said the delay could cause the House to change how it does some things, but he remains confident the legislature will pass a balanced budget by the Constitutional deadline of May 5.

“If we have to mess with our hearing schedule a little bit, start a little bit before [Greitens’] budget release on some of these departments that have fewer decision items and some of the ones that are commission-appointed directors and so forth, then we may have to do that.  I’m going to try not to do that but we’ll do whatever we have to do.”

The House’s appropriations subcommittees will begin holding hearings next week.